Patanjali sales dip as rivals advance into natural space

Patanjali Ayurved reported a dip in its sales and profits for the year ended March 2018 due to increased competition with many rivals, mostly multinationals, rolling out natural and herbal products as well as its own distribution troubles post GST rollout.

The Baba Ramdev-led enterprise’s revenues fell 10% to Rs 8,135 crore in the last fiscal from Rs 9,030 crore in 2016-17, according to financials sourced from research platform Tofler. According to provisional data sourced by CARE Ratings, Patanjali’s net profit more than halved at Rs 529 crore in FY18 from Rs 1,190 crore a year earlier.That is in sharp contrast to the firm’s stand-out performance in the previous years since 2013 when its annual sales had been doubling every year till FY17.

“The decline in turnover was primarily because of the company’s inability to timely adapt to the GST regime and develop infrastructure and supply chain,” a report by Care Ratings said. “Further, there was a sharp decline in its profitability margins, with the profit before interest, lease, depreciation and tax (PBILDT) margin declining from 18.7% in FY17 to 11.9% in FY18 on account of increased overheads due to ongoing expansions and majorly due to growing selling and distribution expenses,” it said.

Patanjali didn’t respond to an email query as of press time Wednesday.

The Haridwar-based company had appointed separate distributors for different business verticals such as staples, personal care and biscuits among others, which, analysts said, created issue in servicing levels.“Growth slowdown in Patanjali is a direct result of poor management of trade channels and lack of a coherent advertising strategy,” an investor note by IIFL Institutional Equities said.

“Splitting distributors according to product categories has also complicated retailer servicing,” it said.

At the same time, competition reacted and clawed back lost market share.

“Impact of Patanjali has come down significantly in the market and Dabur has regained all the market share lost to the brand,” wrote Varun Lohchab and Tanmay Sharma, analysts at Jefferies.

For a company that started as a small pharmacy in 1997, Patanjali has launched more than two dozen mainstream FMCG products — from toothpastes, shampoos and other personal care products to modern convenience foods such as cornflakes and instant noodles — and in the recent years it emerged the fastest growing consumer products firm.